Why are we short on suitable housing?

Pic courtesy Interest.co.nz

During much of the twentieth century, the government had a significant role in enabling the supply of good quality housing (known as State housing) in New Zealand[1]. However, over the past 25 years there has been a shift away from supply side housing subsidy (bricks and mortar), which addresses the shortage or unresponsive supply, towards allowances for tenants (Accommodation Supplement)[2]. This shift has been accompanied by privatisation of publically owned (State) housing.  The government has largely withdrawn from public private partnerships that were developed to ensure that a sufficient number of state houses were built.

The general rationale for this shift, from a post-war welfare state to a new neoliberal economy, includes the greater efficiency of the market, the perceived failure of publically owned housing, and the growing fiscal constraint of the State.  Housing is regarded as an asset and has a large proportion of capital tied up in it.

The proportion of people living in private rental housing, where there is little regulation of either price or quality, has grown and more people are experiencing and severe housing deprivation.

The government is currently focused on the development of a ‘social housing market’ and the privatisation of state owned residential properties. Community housing providers are being encouraged to buy Housing New Zealand stock to level the playing field in the developing ‘social housing market’. Housing New Zealand is a State owned company that has been noted by Bill English to have a ‘monopoly’ in the provision of ‘social housing’[3]. The distinction between State owned housing and social housing is increasingly blurred and confused.  As Howden Chapman notes, by 2015, the term ‘state housing’ had been absorbed by the term ‘social housing’.[4] Housing New Zealand (HNZ), along with a host of smaller Community Housing Providers (CHP), are now all classified as social housing providers.

It is important to note that the shift of asset ownership from Housing New Zealand to Community Housing Providers, does not necessarily result in an increased pool of housing. There does not appear to have been an adequate provision of extra capital to allow Housing New Zealand or Community Housing Providers to expand and to reconfigure the stock of state or social housing[5].

Houses are now predominately treated as a commodity rather than a home for people to live in. The increasing shift to market provision has seen a reduction in moderately priced homes and the steady reduction in home ownership rates. Twenty five years ago, around 30% of new homes coming into the market were priced in the lower quartile and 30% were priced in the upper quartile. Today, only 5% of new homes are priced in the lowest quartile and nearly 50% of new homes are priced in the upper quartile[6]. The housing market is generally unresponsive to the needs of lower income communities.

[1] For a relatively comprehensive history of housing policy in New Zealand, see Howden-Chapman, P. (2015). Home truths: Confronting New Zealand’s housing crisis. Wellington: BWB.
[2] Johnson, A. (2013). Give Me Shelter. An Assessment of New Zealand’s Housing Assistance Policies. The Salvation Army Social Policy and Parliamentary Unit.
[3] Howden-Chapman, P. (2015). Home truths: Confronting New Zealand’s housing crisis. Wellington: BWB.
[4] ibid
[5] Johnson, A. (2013). Give Me Shelter. An Assessment of New Zealand’s Housing Assistance Policies. The Salvation Army Social Policy and Parliamentary Unit.
[6] New Zealand Productivity Commission (2012). Housing Affordability Inquiry, Wellington.

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